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ALBUQUERQUE, N.M. – U.S. Attorney for the District of New Mexico Fred J. Federici today announced a settlement agreement with the Santa Fe Boys and Girls Club to resolve issues involving two special project grants awarded to the Club.

According to the settlement agreement, the U.S. Department of Housing and Urban Development (HUD) awarded two grants to the Club to purchase land for construction of a new facility. HUD granted the Club $268,245 in 2003 and $497,050 in 2004, from which a total of $750,986.51 was distributed to the Club. In 2005 the Club used the funds to purchase a parcel of land located at 1107 Ocate Road in Santa Fe, New Mexico.

At issue was the Club’s failure to use the grant funds as outlined in the agreements. The government asserted that the Club failed to build a new facility and then did not return the funds as prescribed by HUD, federal law, and the grant agreements. Additionally, the sale of portions of the land by the Club, other encumbrances on the land incurred by the Club, and the Club’s failure to remit the proceeds of those encumbrances to the United States violate federal law, the grant agreements and the False Claims Act.

“The United States relies on grant recipients to use taxpayer-funded grants appropriately,” said U.S. Attorney Federici. “Failure to do so violates the law and the public trust and will be vigorously pursued by the Department of Justice.”

"This unfortunate mismanagement of HUD program funding not only violates the public trust, it is a gross injustice to the communities directly impacted," said Special Agent-in-Charge Bertrand Nelson with the HUD Office of Inspector General (OIG). "HUD OIG is committed to ensuring HUD community development grants are appropriately managed and used for the benefit of the communities they are intended to assist."

In accordance with the settlement, the Club has paid $1,407,640.58 to the United States. The United States releases the Club from any civil or administrative monetary claim for the Club’s conduct in this matter under the False Claims Act.

Assistant United States Attorney Sean Cunniff and Auditor Julie Chappell represented the United States in this settlement agreement.